Syracuse-based Pyramid Companies, owner of the Palisades Mall, obtained a loan extension last week to end a financing crisis for the Rockland County super mall. Prior to last week, Pyramid had previously received three mortgage extensions for the property.
Last month, the Real Estate Finance and Investment newsletter said investors were getting anxious after a $550 million loan on the mall was placed into special servicing. The Syracuse Post-Standard reports
Loans are put in special servicing when they are in imminent danger of default or, as was the case with Palisades’ mortgage, the borrower is current on his payments but unable to refinance the loan by its maturity date. That could be either because of tough credit markets or because a property’s value has declined since the loan was issued.
In special servicing, lenders sometimes agree to extend a mortgage, often in exchange for an extra payment by the borrower. But they also have the option to declare the loan in default and foreclose on the property.
The closing of Circuit City and Steve & Barry’s, which together accounted for about three percent of rentable space, was one of the reasons cited for the glut of unrented retail space. According to Wikipedia, the Palisades Mall is the 10th largest US shopping mall.
Pyramid Companies and its founder and managing partner Robert Congel run 19 retail, restaurant and entertainment centers with 19.2 million square feet in New York and Massachusetts. One property, Berkshire Mall in Lanesborough, MA, was “inching closer to default” according to BankerAndTradesman.com. In June, an expansion of Pyramid’s Carousel Center in Syracuse was halted after a $155 million construction loan from Citigroup was put on hold.